The current steel market is performing a "child-risk market". It cannot rise or fall. It is tasteless to eat, but it is a pity to abandon it. Not taking the initiative, not being responsible, not refusal.

The current steel market is performing a "chicken rib market". It cannot rise or fall. It is tasteless to eat, but it is a pity to abandon it.

is not proactive, is not responsible or refuses. This is what the current market view is. He is both ambitious and cautious; he is full of passion and carefree. The old men said one after another that the pleasure of trend main upward wave has not been experienced for a long time!

What are the reasons behind the sharp drop in the month of September?

01

Although the traditional "Golden September and Silver October" has passed by three-quarters, the performance of the steel market this year is still weaker than the same period last year. During the National Day holiday, statistics from many industry institutions showed that the domestic steel market accumulated obvious inventory during the holiday, which also caused steel prices to rise and fall back to after the holiday. Judging from the post-holiday data, the degree of recovery in steel market demand is still unsatisfactory.

As the end of September approached, steel prices rebounded slightly. Driven by demand for stocking before the National Day, the steel market in September is expected to end in the "tail" market. However, looking back at the market throughout September, the market did not get out of the shadow of weak demand and steel prices did not make a substantial breakthrough.

In the futures market, the rebar futures price and hot-rolled coil futures price have been hovering between 3,700 yuan/ton to 3,800 yuan/ton, and have been unable to break upward for a long time, let alone recovering the lost land of 4,000 yuan/ton. Compared with the increase of that often cost hundreds of yuan per ton during the "Golden September" period, the market conditions of this year's "Golden September" are obviously a bit dim.

analysis believes that the reasons why steel prices failed to fulfill the expected market in September this year are mainly the following aspects:

First, peak season expectations failed and demand was insufficient. Terminal demand has improved marginally but the release intensity has always been lower than expected. This is the most obvious feature of the demand side of the steel market in September this year. It is understood that since September, the weekly average of apparent steel consumption has been around 3 million tons, which is about 300,000 tons compared with the previous traditional peak demand season. This is mainly because the real estate industry has weak recovery, resulting in the failure to fully release demand. At the same time, infrastructure projects were restricted due to funding and epidemic reasons, resulting in the overall weak steel demand intensity in September, which could not provide effective support for the rise in steel prices.

Second, the slight increase in supply suppressed the upward space for steel prices. The reduction in production and supply have increased slightly, which is another important reason why steel prices failed to rise in September. The latest data from the China Steel Industry Association shows that in mid-September, the national average daily output of crude steel reached 2.857 million tons, a month-on-month increase of 1.52%; the average daily output of pig iron reached 2.5159 million tons, a month-on-month increase of 1.28%; the average daily output of steel reached 3.764 million tons, a month-on-month increase of 1.21%. When demand is insufficient, supply increases instead of falling, resulting in a negative situation of "strong supply and weak demand", which in turn drags down steel prices.

Third, macro negative factors disturb market sentiment. Since early September, in order to stabilize the economy and growth, the country has intensively introduced a number of policy measures. However, for the steel market, the economic operation data in August was lower than expected, and the poor performance of steel-related data aggravated the market's pessimism. In addition, the "black swan" event occurred in September - Fed significantly hikes interest rates , and the domestic futures market bearish sentiment has become increasingly strong. Under the disturbance of these negative factors, it is difficult for steel prices to find a point of breakthrough.

Why are market participants pessimistic about steel prices in the fourth quarter?

02

Since October entered, nearly half of the "Silver October", steel prices are still weak. During the market visit and investigation, steel traders generally lack confidence and are pessimistic about the demand and price trends of steel market in the fourth quarter. It is expected that fundamental negative factors will still be difficult to eliminate. There are mainly three aspects:

1. The downturn in the domestic real estate industry is difficult to reverse

Before the National Day, the three major real estate stimulus policies issued by the Central Bank of China, the Ministry of Finance and the State Administration of Taxation, seem to be not very ideal.According to statistics, from October 1 to 5, the real estate sales area in 30 large and medium-sized cities fell by 41% compared with the same period last year.

Although the senior management "three arrows were launched at the same time" in the last week of September, the real estate market regulation policy has not yet shown any actual effect during the National Day. In the later period, it is necessary to further observe the role of macro policy in promoting real estate.

At present, the biggest problem in the real estate industry is that no matter how many favorable policies are, the house cannot be sold, which will be fatal to the industry and will definitely continue to have a negative impact on the domestic steel industry.

2. The off-season of the domestic steel market is coming in late October

The rare cold wave during the National Day period has just ended. At present, a new strong cold air from all over the country has come on its way again. The rain and snow will affect outdoor construction on construction sites in some parts of the country.

At present, there will be moderate to heavy rain in the eastern plains of Inner Mongolia, Liaoning, central and eastern Jilin, southern and eastern Heilongjiang, and local heavy rain; there may be light to moderate snow or rain turning to snow in the high-altitude mountainous areas in northern Hebei, central and eastern Inner Mongolia, and eastern Jilin.

According to the operating rules of the steel market in previous years, after late October, the steel market will enter the annual traditional demand off-season, by which time, steel sales will gradually drop to the lowest point of the whole year.

3. The impact of external factors on the steel market cannot be ignored

Previously, had a sharp rise in The US capital market experienced a panic plunge last night, mainly due to mainstream media reports from the United States: the Federal Reserve is on the road to another major interest rate hike.

The next Fed interest rate agenda meeting is scheduled to be held from November 1 to 2 local time. At present, the market generally expects that the probability of the Fed raising interest rates by 75 basis points at its November meeting is close to 80%.

The United States has continuously raised interest rates sharply, which has hit the global economy very hard. Of course, the impact on the demand and price of commodity will also be very far-reaching, and the bear market may be approaching step by step.